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Unmesh Sheth 10/13/22 3:06 PM 5 min read

5 Biggest Challenges that nonprofits face in impact measurement

Nonprofit Impact Measurement Challenges

There is an increase in nonprofit organizations because we are facing global challenges related to social and environmental impact. Nonprofits need to do impact measurement and management to get clarity on the intended impact and actual results. The purpose of impact measurement and management is to make informed decisions as well as to continually improve and learn. 

A nonprofit's impact must be communicated to all stakeholders more than ever before. The measurement and management of impact can also assist nonprofits in telling their stories of impact. Measuring impact has become a necessity for nonprofit organizations in this era. Nonprofits, however, face some challenges when it comes to it. Nonprofits need to overcome these barriers and integrate these practices into their daily operations. 

What are the challenges nonprofits face when measuring their impact?

  1. Impact measurement is complicated and expensive
  2. It is imperative that program managers have input and commitment to measuring the impact
  3. Nonprofits may find it difficult and expensive to develop an impact measurement system
  4. Evaluation of impact measurement and management processes is a difficult task
  5. No set standards or guidelines for IMM in the social sector

  • Impact measurement is complicated and expensive

Impact measurement is a buzzword in the social sector, and no organization wants to be caught dead without a strategy in place. Despite growing excitement and genuine efforts, the reality is often different. Impact measurement and management are often perceived as an expensive box-ticking exercise, and in many organizations, data-driven decision-making remains merely wishful thinking at this point.

Many program makers find, often rightly, that the costs of impact assessment are disproportionate to the costs of the programs they are looking to evaluate. Digitalization has driven down costs in data collection. Still, the stigma remains and is intensified if program makers do not benefit from insights generated through impact measurement in the form of reports that meet their needs and timelines.

Prioritizing what needs to be measured, how it needs to be measured, what tools to use, how to analyze the data collected, how to visualize the impact data, and sharing it with the relevant stakeholders. Additionally, it can be challenging to address social issues and painful to predict and objectively evaluate human behavior for nonprofits. 

Read More: 3 Reasons: Why measuring impact for nonprofits is essential?

  • It is imperative that program managers have input and commitment to measuring the impact

Impact measurement is often perceived to be out of touch with the realities of the program. Program makers and evaluators often work in isolation, partly to ensure that monitoring and evaluation can be carried out without bias. The result of this isolation is frequently that program decision-makers are not involved enough and do not understand how the overall program can benefit from data. This perception is further enforced if metrics are badly defined because relevant exchanges have not taken place. If metrics definition becomes the bottleneck of your impact strategy, you risk wasting a lot of resources and may fail to measure what matters.

Read More: A Guide to Writing an Effective Impact Report for Nonprofits

  • Nonprofits may find it difficult and expensive to develop an impact measurement system

There can be different kinds of tools involved in impact measurement and management for nonprofit organizations. For example, survey tools, data management tools, analytical tools, etc. It is difficult for nonprofits to develop all of these tools in-house. It would be highly expensive for nonprofits. There are a number of impact measurement tools available for nonprofits in the market. With modern technology, these tools have become robust and easy to use with automation and third-party integrations.

However, nonprofits can find these tools expensive and difficult to use because of a lack of experience and knowledge. Nonprofits have to become data-driven and technology adapters like businesses to maximize their impact. 

Impact startups and social enterprises are trying to come up with tools and solutions that are easy to use and affordable for nonprofits.

Read More: Case Study: Scaling Up to End Poverty


  • Evaluation of IMM processes is a difficult task for nonprofits

There are not many experts in this space in the social sector. Also, there are not many examples and guidelines available for the nonprofit sector. We have also seen that the impact measurement and management process could vary from organization to organization. We have not heard many success stories in IMM for nonprofits. This makes it more challenging for nonprofits.

IMM is gaining acceptance in the nonprofit sector, and we have seen this paradigm shift toward it by nonprofit organizations. Hence, we think sooner rather than later, we will see many nonprofits using these practices as a tool to achieve their organizational objectives. Thus, we will see many professionals and companies with expertise and knowledge in this space. 

Read More: How Impact Data Pipeline Can Simplify Impact Management?

  • No set standards or guidelines for impact measurement and management in the social sector

Many organizations are working on developing these standards and guidelines for impact measurement and management processes. Some of the approaches are already being used by some organizations in the social sector. Nonprofit organizations should be looking at these standards and guidelines to make sure that they are using appropriate impact measurement processes for their organization.

Organizations like GIIN and other players in the impact space are coming up with standards and guidelines for implementing IMM for different verticals and impact themes. This would guide nonprofits and help them overcome many of the IMM challenges they face.

Read More: What Does It Take To Create The Right Social Impact Strategies?

With the recent trends in IMM and the use of technology, we are optimistic that nonprofits will easily overcome the challenges. The social sector as a whole is trying to implement impact measurement and management for continuous improvement and learning to modify their processes at regular intervals as required. This would also help nonprofits to show both qualitative and quantitative data to their funders and stakeholders. Sopact is working with many nonprofits to build impact measurement and management capacities. Feel free to reach out to us for more information. 

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Unmesh Sheth

32 years of track record In technology companies, innovation, leadership. Deep understanding of bottom-up and top-down data trust challenges in high impact philanthropy and impact investments.